The economy and the consumer experience…
Here in the Bay Area, we are in a conflicted and constricted marketplace, which is why I’d like to address both the economy and the consumer experience in this month’s Market Insight.
In terms of the amount of transactions, year-over-year, we are seeing 36% less total transaction on average across the 4 Bay Area counties: Marin, San Francisco, San Mateo, and Alameda. This represents the lowest amount of transactions since 2008!
There are several factor affecting our local economy that I believe warrant outlining:
More than three years after the pandemic shifted workplaces from office buildings to private residences, the work-from-home phenomenon could be a factor in the San Francisco housing market for many seasons to come.
Less workers in the downtown area has greatly affected the culture of our restaurants, the hospitality business and our commercial sector.
Increased mortgage rates combined with an inventory shortage caused a significant drop in home sales throughout the Bay Area (graph above)
This has exaggerated the demand for single family homes, and continues to disproportionately affect condos/ lofts/ townhomes and tenancy in common properties.
Big banks, those covering the gap left behind by the collapse of SVB & FRB, can afford more stable interest rates, yet are pricing their rate higher to cover the potential of refinancing should rates come down during a recession(?)…this affects consumers unevenly; confusing many first-time homebuyers.
The long-run concern is that startups will not be as successful since losing SVB, their go-to financing partner, and that may attenuate future Silicon Valley growth and slow job growth + real estate appreciation locally
When there is a decline in mortgage rates and a shortage of home inventory, homebuyers will be back in the market to purchase a home. Home ownership is a tax shelter for homeowners, a hedge against inflation, and protection from a bank collapsing (with your savings)
Now, on to the consumer experience. As predicted in my video last September, the market is favoring buyers right now because you can negotiate a bit more than you could have a couple of years ago. While inventory is lower, buyers are also enjoying less competition. Depending on how long you wish to own the property, your financing, and the property type, it could be a great time to purchase in the Bay Area. I certainly believe the prices will continue to appreciate.
See graph below: Over the last ten years, the Average Sales Price of homes has nearly doubled(!)
To touch on the consumer experience for a Seller, I am focused on being a fiduciary…meaning, can I help you solve problems and guide you in some way?
Can I help you clear out personal property, get things donated to local charities, or set up a 1031 exchange?
Has anyone shared the importance of assembling a complete disclosure package and virtual media package before we come onto the market?
The market isn’t making up for any deficiencies in pricing or presentation. My team will ensure that your listing appeals to the greatest amount of Buyers and that you get the highest possible price and the best possible terms!
When developing a strategy for Sellers, I’m comfortable problem solving and working through the sometimes difficult relationship dynamics of an HOA or addressing complicated real estate situations. Let me help you navigate this market. Contact me to help you get an advantage in our conflicted and constricted market place.
Is there something you’d like to see more in this article? I welcome your feedback and comments!